BlackRock Investors Nix Bids to Sway Climate, Diversity Policies

BlackRock investors rejected two shareholder proposals Wednesday representing opposite ideologies of the environmental, social and governance debate.

One proposal from a conservative group asked the company to issue a study of how its diversity, equity and inclusion policies could negatively affect employee hiring, promoting and retention. The other requested BlackRock produce a report on how the world’s largest asset manager could use its proxy-voting power to spur other companies to more quickly reduce their carbon footprints.

The dueling proposals, come at a time when BlackRock is under intense scrutiny by ESG backers and opponents. BlackRock has become a target of conservatives in recent years over CEO Larry Fink’s sustainability views, with Florida and several other Republican-led states vowing to pull retirement funds from the asset manager.

Still, both proposals failed. The DEI proposal garnered less than 1% of the vote, while the carbon reduction proposal received about 10% of the vote.

The company didn’t immediately respond to a request for comment.

‘Unfounded Claims’

The conservative investor group National Center for Public Policy Research said in its proxy statement that DEI practices undermine merit among employees. The group said “equity” actually means that employee pay decisions are made on the basis of race, sex, sexual orientation and ethnicity—which are in and of themselves racist and sexist.

“The company asserts that it offers equality of opportunity regardless of race, sex and orientation, but that’s the exact opposite of equity,” said Scott Shepard, a fellow at the National Center for Public Policy Research, in prepared remarks.

BlackRock said in its proxy-statement response that a diverse workforce and “an equitable and inclusive work environment” are vital to the company’s success. The asset manager called the center’s views of its DEI policies a mischaracterization, and said equity means “everyone has fair access to opportunities to advance and succeed.”

Advise, ‘Not Direct’

The second proposal from activist investor group Rights CoLab co-founder Paul Rissman asked BlackRock—which holds more than $9 trillion in assets—to issue a study that outlines how it could use its leverage to steer companies into more aggressive carbon reduction goals.

The proposal said BlackRock should use its shareholder clout to influence change as a result of its public commitment to help counter climate change. BlackRock in a 2021 statement called for an orderly transition to net zero emissions by 2050 and for companies to have “robust transition plans” by 2030.

As the world’s largest asset manager, the company could vote for shareholder proposals asking for decarbonization and voting against directors of companies who are “unwilling to decarbonize in a timely fashion,” Rissman said in prepared remarks at the company’s annual meeting.

“BlackRock once used its mighty voice to loudly proclaim that ‘climate risk is investment risk,’ but the firm has pulled back on this message perhaps to avoid antagonizing climate denialists,” Rissman said.

BlackRock said in its 2021 statement that its role in the transition to clean energy is out of a fiduciary responsibility to its clients. The company said its job is to help them with investment risk, not to “engineer a specific decarbonization outcome in the real economy.”

Fink said in response that it’s not BlackRock’s role to achieve the best long-term investment performances for its clients, “consistent with their mandate, their wishes.” Fink said his firm represents clients who want BlackRock to have a more active role, but also clients that don’t.